Correlation Between PetroShale and Canacol Energy
Can any of the company-specific risk be diversified away by investing in both PetroShale and Canacol Energy at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining PetroShale and Canacol Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PetroShale and Canacol Energy, you can compare the effects of market volatilities on PetroShale and Canacol Energy and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in PetroShale with a short position of Canacol Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of PetroShale and Canacol Energy.
Diversification Opportunities for PetroShale and Canacol Energy
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between PetroShale and Canacol is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding PetroShale and Canacol Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canacol Energy and PetroShale is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on PetroShale are associated (or correlated) with Canacol Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canacol Energy has no effect on the direction of PetroShale i.e., PetroShale and Canacol Energy go up and down completely randomly.
Pair Corralation between PetroShale and Canacol Energy
Assuming the 90 days horizon PetroShale is expected to generate 0.68 times more return on investment than Canacol Energy. However, PetroShale is 1.47 times less risky than Canacol Energy. It trades about -0.04 of its potential returns per unit of risk. Canacol Energy is currently generating about -0.05 per unit of risk. If you would invest 40.00 in PetroShale on November 3, 2024 and sell it today you would lose (10.00) from holding PetroShale or give up 25.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PetroShale vs. Canacol Energy
Performance |
| Timeline |
| PetroShale |
| Canacol Energy |
PetroShale and Canacol Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PetroShale and Canacol Energy
The main advantage of trading using opposite PetroShale and Canacol Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PetroShale position performs unexpectedly, Canacol Energy can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Canacol Energy will offset losses from the drop in Canacol Energy's long position.| PetroShale vs. Dno ASA | PetroShale vs. Horizon Oil Limited | PetroShale vs. Enwell Energy plc | PetroShale vs. Tullow Oil plc |
| Canacol Energy vs. PetroShale | Canacol Energy vs. Inpex Corp ADR | Canacol Energy vs. Battalion Oil Corp | Canacol Energy vs. Condor Petroleum |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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